Companies Act 2014 section 1181

Prohibition on certain provisions in constitution, etc. and issuing of shares

Section 1181 prohibits a company limited by guarantee (CLG) from including provisions in its constitution that grant profit-sharing rights to non-members, and prevents a CLG from dividing its undertaking into shares or issuing shares.

• Any provision in a CLG's memorandum, articles or resolutions that purports to give a person (other than a member) a right to share in the company's distributable profits is void.
• Any provision or resolution that attempts to divide a CLG's undertaking into shares or interests is treated as creating a share capital and is likewise void, even if no nominal amount or number of shares is specified.
• A CLG is expressly prohibited from purporting to issue shares; if it does so, both the CLG and any officer in default commit a category 3 offence.
• An exception preserves the validity of distributions made before the commencement of this section by CLGs registered before 1 January 1901, where those distributions were made under a provision or resolution that would otherwise be void.